The answer to that question is quite interesting, since the function of a central bank would be in conflict with another feature, because in the last century these institutions have position themselves as trusted third parties to manage State-issued coins, print money and establish interest rates. But based on the existence of authorized Blockchains, a central bank digital currency could be developed.
Central bank-issued cryptocurrencies
This cryptocurrencies would be like “a central bank granting universal access to their balance sheets in an electronic way, 24-7, in domestic currency and with the capacity to carry interests.”
Therefore, the main difference to what we know so far about cryptocurrencies would be that central banks would issue and support them. This way, the central bank-issued cryptocurrencies would be digital, high-security devices with three roles: means of payment, stored value and unit of account.
Just as paper currency, every unit would have a serial number to avoid duplicity.
Central banks involved with cryptocurrencies are exploring if transactions can be more efficient, steady and even if they could better implement their economic policies, using this technology to fix the current economic system weaknesses, especially cash issues.
They believe that failing to understand and exploit digital currencies could undermine their central role in the economy. Therefore, it's important to underscore that central bank-issued cryptocurrencies would be similar to virtual wallets at the moment of replacing cash, instead of the interbank transfer technologies.
The central bank’s main interest to explore this technology is also based in the macroeconomic implications, a bigger action margin in the event of crises, and the costs to issue and keep the cash. That’s why there is pressure to have an independent analysis in this matter.
Countries open to issue their own cryptocurrency
The Bank of Estonia announced its intention to launch the “Estcoin” as part of its electronic residency and citizenship program; the Bank of Japan partnered with the European Central Bank to explore how to apply a decentralized log in the market’s financial infrastructure; the Central Bank of Sweden began a detailed research into launching the “e-Krona” as a supplement for cash.
The U.S. Federal Reserve has published documents and research about offsets, payments and liquidations; the Bank of Canada launched the “Jasper Project,” a public and private initiative to simulate a Blockchain for interbank liquidations; the People’s Bank of China is looking into technologies to issue their own cryptocurrency, an eye-catching case because of the bans of the Asiatic giant on Initial Coin Offerings and other digital restrictions.
Likewise, the Central Bank of the Russian Federation has made initial tests into the viability of different schemes of central bank-issued cryptocurrencies in multiple platforms.
Under this scheme, inspired in digital wallets, the central banks would allow their users to have electronic money accounts, which would be registered directly with such national financial institutions.
By Antonio Menéndez